Essays on labour economics

Abstract

Empirical studies in labour economics often suffer from endogeneity problems. Employing exogenous variations in policies and natural shock, this thesis investigates three topics. The first two topics concern labour market phenomena in Thailand, whereas the third provides a case study of labour demand adjustment after an international
supply chain shock. Chapter 2 assesses the impact of minimum wage policy on wage inequality in Thailand.
The result is rather mixed. Although the minimum wage effectively reduces wage inequality among workers in formal sectors, it does not affect the wage distribution in the informal sector at all. The evidence suggests that such a result is mainly driven by weak law enforcement.
Meanwhile, using changes in compulsory schooling law, chapter 3 provides consistent estimates of the rates of return to education in Thailand. Based on the IV method,
only female employees experience a positive and significant return to (upper primary) education. Interestingly, the size and direction of bias of the estimator, especially for male sub-sample, are not consistent with the conventional result. The possible reasons underlying these findings are elaborated. Chapter 4 relies on a different type of shock. The Great Tohoku Earthquake and Tsunami 2011 is treated as an external shock to the international supply chain of Auto industry. Then I estimate the impact of the supply chain disruption on labour inputs adjustment in the US auto industry. Despite the break down in supply chain of motor
vehicle parts and accessories among Japanese auto companies, these firms do not seem to reduce their labour inputs (used as a proxy for changes in production)
significantly except for a small drop in average monthly earnings of workers in Japanese assembly plants.
Also, their competitors make only slight adjustment to capitalize on the Japanese loss. Regarding other margins of adjustment, there is no evidence in support of the adjustment through import or price. Yet inventories and sales incentive appear to be major tools employed to mitigate either positive demand or negative supply shocks on both groups of companies.